Due to unfavourable tax policies and other hurdles such as poor infrastructure etc., automobile exports from India have been declining for quite some time. In the month of September 2014, most of the manufacturers have reported a double digit drop in the number of exports. Some companies however claim that this is happening due to the shift in focus on the local market rather than exports.
- Maruti: -28%
- Hyundai: -21%
- Honda: -45%
- Mahindra: -18%
- Toyota: -60%
- Tata Motors: -18%
Primarily built i India for the export markets, the i20 is no longer built in India for the European markets. Hyundai claims that they want to free up more space to meet local demand and reduce waiting periods of popular cars. Even Renault has stopped the export of the popular Duster SUV to the British markets, and is now exported from Romania.
If a said company imports raw materials, the import duty increases the production costs significantly, and hence, it does not remain viable to produce at a location where there is no good sustainable business with a good profit margin.
Has the ‘Make In India’ message been received well with the car manufacturers?
(% drop figures mentioned above are YoY, September 2014 compared to September 2013)